DXY (US Dollar) 4 HR CHART
The US Dollar has been making lower lows and lower lows indicating a downward trend. However since Dec 12 the dollar has been moving upward. The question is will it make a new higher high to end the downward trend or will it post a new lower low to keep the downward trend in motion?
To answer this question I look to the currency strength indicator below the price chart. Notice the location of the currency strength indicator just before the dollar made a new lower low. The currency strength indicator made a low just before the dollar turned upward. Further notice the currency strength indicator made a high one day before the dollar made a new lower high.
As a result normally the currency strength indicator will either make a lower low or a higher high just before price action reverses direction.
Now when I look at the currency strength indicator I see it is continuing to move upward, as a result I would expect the US Dollar to continue moving upward as well until the currency strength indicator makes a peak. Further notice the currency strength indicator normally moves between extreme weakness to extreme strength. As a result it looks like the currency strength indicator has a long ways to go before entering extreme strength territory. Further this is also an indication the US dollar has a long ways to go before reversing directions.
To answer this question I look to the currency strength indicator below the price chart. Notice the location of the currency strength indicator just before the dollar made a new lower low. The currency strength indicator made a low just before the dollar turned upward. Further notice the currency strength indicator made a high one day before the dollar made a new lower high.
As a result normally the currency strength indicator will either make a lower low or a higher high just before price action reverses direction.
Now when I look at the currency strength indicator I see it is continuing to move upward, as a result I would expect the US Dollar to continue moving upward as well until the currency strength indicator makes a peak. Further notice the currency strength indicator normally moves between extreme weakness to extreme strength. As a result it looks like the currency strength indicator has a long ways to go before entering extreme strength territory. Further this is also an indication the US dollar has a long ways to go before reversing directions.
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